News of the FCA’s Consumer Duty regulations sparked some lurid headlines about heads of financial services firms being heavily fined for failing on customer service.

Setting aside the hyperbole, the new rules do put pressure on insurers, banks, and others to take customer centricity even more seriously. Unlike banking, customer interaction with an insurer is not every day and tends to be occasional, such as for claims or renewals. The Consumer Duty regulations aim to ensure that those few points of contact meet higher standards.

To be fair, insurers have been making huge efforts to understand and engage with their customers for years. There are continuing investments in people, process improvements, and digitisation to create more relevant products and better customer experiences when people seek insurance and make claims.

Despite all of this, it is also the case that closing the engagement gap remains challenging despite these efforts. Our third annual survey of UK consumer attitudes towards insurers illustrates the work that still needs to be done. More than a third of people think that insurers are necessary but inconvenient (36%), with a quarter (25%) believing that they sell overpriced products and are reluctant to pay out a claim. More than a quarter (26%) of people said that their opinion of insurers was negative and that it had not changed in the past twelve months, a trend that could threaten to undermine the good work that the industry does for its customers.

Yet for many customers, their experience of insurer interaction is positive when they seek help. In our study, one in two customers say they believe that the customer service agents they speak to have all the necessary information required to help them. 

What is more striking is how customers might actually want a closer relationship with their insurer. For example, there does appear to be an opportunity for insurers to be more involved in their customers’ day-to-day lives in the form of proactive services that prevent damages. Six out of ten (61%) people would welcome a service that sent warnings about issues to avert damage before it happens, such as Azur’s partnership with Grohe or Hiscox’s partnership with LeakBot. As consumers are becoming more familiar with the ability of smart household devices to collect and utilise data in helpful ways that can make their lives easier, there is an increase in their use. So, it is unsurprising that real time data about home plumbing (21 percent), driving (20 percent), and home heating (19 percent) are the three types of data customers are most willing for their insurer to gather and analyse.

Together, the FCA Consumer Duty regulation and the loyalty penalty ban are necessary to raise customer care standards. Through these measures, the issues of price walking and rip-off charges and fees can be tackled across the board, protecting customers. However, insurers should not be cowed by these measures. All are keen to find better ways to win and retain customers through good products and services and should keep their focus on how they can go the extra mile to become even more relevant to their customers’ lives through investment in new technologies.